Title: How to attract the crowd in crowdfunding?

Authors: Sibin Wu; Bin Wang; Yuanqing Li

Addresses: College of Business Administration, University of Texas-Pan American, Edinburg, TX 78541, USA ' The Bill Munday School of Business, St. Edward's University, Austin, TX 78704, USA ' College of Business Administration, University of Texas-Pan American, Edinburg, TX 78541, USA

Abstract: We use signalling theory to study a new capital market finance phenomenon: crowdfunding in China. Our finding indicates that signals such as the frequency of announcements and the amount of the highest bid have an impact on the success of crowdfunding projects. Based on a sample of 192 projects collected on a Chinese crowdfunding platform, demohour.com, we find that the amount of the highest bid has a positive effect on completing a successful crowdfunding project. However, for high-tech industry, our results indicate the amount of the highest bid is not as effective as the movie/music industries. We also find the frequency of announcements made by the project founders is a better predictor for funding success in the high-tech industry than in the movie/music industries.

Keywords: crowdfunding; signalling theory; information asymmetry; highest bid; lowest bid; announcement frequency; demohour.com; China; high-tech industry; high technology; movie industry; music industry; funding success.

DOI: 10.1504/IJESB.2015.067465

International Journal of Entrepreneurship and Small Business, 2015 Vol.24 No.3, pp.322 - 334

Received: 28 Jun 2014
Accepted: 06 Sep 2014
Published online: 13 Feb 2015 *

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